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Authentic Brands Buy Reebok for $2.5 billion

Adidas announced on Thursday that it has struck a deal to sell struggling Reebok to Authentic Brands Group for $2.5 billion. Adidas owned apparel and sportswear company will become part of a retail conglomerate that has snapped up many bankrupt brands such as Brooks Brothers, Aeropostale and Forever 21.Authentic Brands is preparing for an initial public offering that could come as soon as this summer. The acquisition of the sneaker and sportswear company is expected to close in the first quarter of 2022. Adidas said the majority of the acquisition price will be paid in cash when the deal closes.

The remainder is deferred or contingent consideration, but the terms of that arrangement were not disclosed. Adidas said it will share the bulk of the deal’s proceeds at closing with its shareholders. Adidas has been looking for a way to spin off or sell Reebok. It bought the Boston-based company in 2006 for $3.8 billion as a way to bulk up its business and better fend off sneaker giant Nike.

Reebok has limped along as Adidas’ own core business grew, prompting pressure from investors to dump the lagging brand. It previously divested some of Reebok lines, Rockport, CCM Hockey and Greg Norman. Authentic Brands CEO Jamie Salter said in a news release that the retail conglomerate will work with Reebok to strengthen its business and maintain its brick-and-mortar stores.

Adidas acquired Boston-based Reebok in 2006 for $3.8 billion intending to take on US rival Nike.The company has struggled to shine under its German owner, despite high-profile collaborations with the likes of Victoria Beckham, Cardi B and Ariana Grande in recent years. Rorsted said that after consideration, they have concluded that Reebok and Adidas will be able to significantly better realise their growth potential independently of each other.

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